A Strong Jobs Report Leaves Republicans in a Pickle

Friday’s employment report for January confirmed what has been clear to objective observers since the middle of last year: the American economy is growing strongly, with employers creating jobs at a healthy clip in most major industries. As always, one month’s figures shouldn’t be overemphasized: the payroll number is a volatile data series with a large standard error. But the longer-term trends, which even out month-to-month variation, are also very positive.

After revising its payroll estimates upward for November and December, the Labor Department now reckons that the economy has created about three hundred and thirty-six thousand jobs a month, on average, since the end of October. In the past year, job growth has averaged more than two hundred and thirty thousand jobs a month; today there are about 3.2 million more Americans working than there were this time last year. Compared to January of 2013, there are about 5.6 million more jobs.

Given the lacklustre rates of job growth that we saw in the early stages of recovering from the 2007–09 recession and in the recovery from the dot-com bust of 2000–01, under the Bush Administration, that’s quite an achievement. Employment growth is “astonishingly strong,” Ian Shepherdson, a Wall Street economist, commented.

So, what does all this mean?

For Americans looking for work—and with the unemployment rate at 5.7 per cent, there are still nine million of them—it’s obviously a welcome development. It’s also good news for people with jobs. More vacancies means more competition for workers, which should eventually lead to a sustained increase in wages. Indeed, contrary to popular perception, wages are already rising more than prices. Not by much, it is true, but in the year leading up to January, according to the Labor Department, average hourly earnings in outside the farm sector rose by 2.2 per cent. With energy prices falling, the over-all rate of consumer price inflation is just 0.8 per cent.

For investors, the immediate issue is what the job figures imply for Federal Reserve policy. (The obvious and correct answer is that it makes an early rise in interest rates somewhat more likely.) For economists, there is the tricky task of reconciling the surge in employment with the latest G.D.P. report, which showed the rate of economic growth slowing down a bit during the last three months of 2014. (My guess is that the G.D.P. figures will be revised upward.)

As for the political implications: What impact will a stronger economy have on the 2016 Presidential election?

History (and James Carville) teaches us that it is likely to be a big one. If healthy employment growth continues throughout this year—which is a big if, to be sure—the G.O.P. will be robbed of one of the most potent arguments any political party challenging for power can have: that the incumbents have screwed up the economy. Should trends continue, 2016 could end up looking more like 1988, when George H. W. Bush scored a third successive victory for the Republicans, or 2000, when the Democrats, under Al Gore, won the popular vote for the third time in row. And it would look a lot less like 2008, when John McCain, burdened by a recession, failed to pull off a party three-peat.

To oversimplify things a bit, Bush, Sr., and Gore both promised voters more of the same, but with a different face in the White House. In 2008, with the economy in recession, McCain didn’t have the option of running on his predecessor’s domestic legacy, and he had great difficulty articulating a coherent alternative. Of course, many other factors affected the race, including George W. Bush’s disastrous war in Iraq and McCain’s shortcomings as a candidate, but the comatose economy was a big burden on the Republicans, just as it would be on the Democrats in 2016 if job growth were still lagging.

A buoyant economy changes the whole environment. If Hillary Clinton (assuming she gets the Democratic nomination) can wholeheartedly embrace President Obama’s domestic record rather than have to equivocate and point out what, if anything, she would have done differently, her task will be much easier. The Democrats aren’t there yet, but things are going in the right direction for them, and the improved economic situation is already having an impact on public opinion.

During the past few months, there has been a notable uptick in Presidential Obama’s approval rating. The numbers vary from survey to survey, but the Real Clear Politics poll average shows Obama’s rating rising from a low of 41.3 per cent in October to a high of 46.2 per cent on February 2nd. One or two individual polls have seen the President hit fifty per cent. If the economic news stays positive, the upward move will almost certainly continue. “Americans’ ratings of Obama appear to be catching up with their improved economic views,” Gallup’s Lydia Saad noted.

The economic argument shouldn’t be pushed too far, however. In 1988, Bush, Sr., was facing an uninspiring opponent in Michael Dukakis. In 2000, Gore, for all his success in winning the popular vote, still lost the election (with the assistance of the Supreme Court). Plus, the electoral environment is changing. A new update from Gallup shows that Americans are more polarized than ever where the Presidency is concerned. The gap in Obama’s approval rating among Republicans and Democrats has averaged seventy per cent, higher than George W. Bush’s average of sixty-one per cent, Clinton’s fifty-six, and Reagan’s fifty-two. Come 2016, there may be fewer centrist voters who will cast their ballots on the basis of their own material welfare.

Pace Carville’s famous dictum, the economy isn’t necessarily everything. But absent a major foreign-policy crisis, it’s the most important factor in Presidential elections, which means that the Republicans are in a pickle. When things are clearly getting better, how do you persuade voters that they aren’t?

Evidently, this is a conundrum that the 2016 wannabes have yet to solve. Around noon on Friday, I went to Twitter. Rand Paul was busy banging on about Loretta Lynch, the nominee for Attorney General. Scott Walker had posted a photo of Ronald Reagan, with a note pointing out that the former President would have been a hundred and four years old on February 6th. Marco Rubio’s most recent tweet was about Venezuela; Jeb Bush’s was a plug for a speech he gave in Detroit on Wednesday about promoting economic opportunity. Ted Cruz had just posted a shout-out to the upcoming Conservative Political Action Conference, where he and other G.O.P. hopefuls will seek to win over conservative activists.